Daily Economic Commentary: Switzerland

[ForexGump]

The CHF ended the week on the positive note against most of the other players. It punched its way against the EUR, GBP, and AUD. It also closed the week slightly up versus the USD. Its only blemish was vis-à-vis the JPY.

No economic updates were issued last Friday as well as for the most part of the week in Switzerland. The CHF’s movement was pretty much dictated by the weak economic results in its counterparts.

The producer price index (PPI) for the month of June will be reported today at 7:15 am GMT. The index is expected to rise by 0.1% after falling by 0.3% in May. This could translate to a consequent rise in inflation as any increase in input prices is usually passed on to consumers. Such gain can be viewed positively and could be bullish for the CHF at least in the period.

[ForexGump]

The CHF was pretty much range bound in yesterday’s trading session. Traders just shrugged off worse-than-expected figure on the producer price index. Switzerland’s Federal Statistics Office reported that producer prices remained flat for June compared to May. Even if it is lower than consensus, this was somewhat positive news though as the PPI has consecutively been in the negative territory since September 2008.

Switzerland’s economic calendar is barren for today so expect the currency to be largely driven by degrees in risk and the fundamental background of currencies pitted against it. The next economic data set for release will be the report on retail sales y/y tomorrow, at 7:15 pm GMT. The prediction is a 0.8% rise in sales.

[ForexGump]

The USDCHF was an odd couple yesterday, as it was one of the few pairs where the USD gained yesterday. This was intriguing, as most of the USD's gains came late in the US trading session, when the pair shot up. A result of low liquidity between the two currencies?

What made the movement of the pair more interesting was that no data had come out from Switzerland yesterday. Could the franc be experiencing weakness as traders are wary over the SNB’s theats for further currency intervention?

Later today, we have the Retail Sales y/y report due at 7:15 am GMT. It is expected that retail sales are up 0.8% on a year on year basis. Tomorrow, the Swiss ZEW Economic Expectations report is due at 9:00 am GMT.

[ForexGump]

Despite Switzerland's weak retail sales report, the USD/CHF found itself sinking towards currency intervention levels. With strong economic reports expected from the US today, could USD/CHF sink further? More importantly, will the SNB intervene in the currency arena again?

Retail sales were reported to be down by 1.4% year-on-year for June. This was against the forecast of a 0.8% uptick. The reading for June, which is lower than May's 1.2% increase, suggests that consumer spending is weaker than expected.

Up ahead, ZEW economic expectations are due at 9:00 am GMT today. Last month's reading was at 9.7. If this month's reading falls back into negative territory, then the USD/CHF could rebound from the 1.0700 levels. Otherwise, it could slide down further towards the 1.0600 area.

[ForexGump]

The Swiss National Bank (SNB) may be smiling as the CHF slipped against all of the other majors except the USD in yesterday’s trading. Remember that the SNB publicly announced that the weakening of the Swissy is part of the bank’s agenda as this would benefit Switzerland’s export industry. Based on the charts, however, there was no apparent bank intervention. Maybe yesterday was just a day when the "invisible hand" came to the Swiss exports' aid.

A drop in the Zew economic expectations report for the month of July may have pulled the CHF down yesterday. The account came in flat at 0.0 after reading at 9.7 in June. The survey is based on the institutional investors’ and analysts’ opinions regarding the relative 6-month economic outlook for Switzerland. The latest score reflects a neutral reading. However, the sudden decline in the figure may indicate that something in the economy is amiss.

No economic reports are due in Switzerland today. The CHF may just look for leads from the economic reports in Canada and the US regarding its short term direction.

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[ForexGump]

The CHF gave the USD a breather as Friday’s trading session came to a close last week. The USDCHF pair finally corrected itself as CHF bulls lost steam after its steep drop downwards. The absence of Swiss economic data last Friday also did not give any reason for the rally to continue.

Switzerland’s economic cupboard for the week is squeaky clean with only the trade balance report due. The trade balance for May, which measures the difference in value of imported and exported goods, will be released at 6:15 am GMT tomorrow. The consensus currently is a 1.87 billion franc surplus.

[ForexGump]

The Swiss franc cut through the US dollar like Swiss cheese yesterday, as investors and traders continued to eat away on increase risk appetite. The USDCHF pair closed at 1.0683, its lowest level in a month.

Later today, the Swiss Trade Balance is due at 6:15 am GMT. The report is expected to show a surplus of 1.87 billion CHF. This report may not have a significant effect on the market at all. The markets have been driven by shifts in risk sentiment. With US Fed Chairman Ben Bernanke scheduled to speak later today, we may see traders hold and wait to see what will be said.

[ForexGump]

The USD/CHF sank to a low of 1.0626 as US Fed Chairman Ben Bernanke's speech pumped up risk appetite yesterday. The pair was quick to rebound after the dip, thus resuming its usual range-bound movement.

The pair has just tapped the 1.0700 mark and is currently tiptoeing away. It found previous support at 1.0660 and it looks like its bound to test this level again. We may find this pair bouncing up and down from these support and resistance levels, owing to the lack of high-impact economic reports from both the US and Switzerland today.

[ForexGump]

The CHF closed on the positive side versus most of the other majors despite not having any positive economic updates in Switzerland. Not much happened yesterday in the world, economics wise. So where did the CHF source its strength yesterday? From the ether maybe.

As mentioned, no economic reports were due in the land of Swiss cheese yesterday. Today will likewise be idle in terms of economic reports. There are, however, several heavy reports scheduled in the UK, Canada and the US. Market sentiment will, therefore, play a key in today’s movement for the CHF. Positive results in the US would be bullish for the CHF. Positive results in the UK and Canada would be bearish for the Swissy.